California employers should brace themselves to shell out higher wages with the state set to raise the minimum wage to $10 per hour by 2016.
Currently, the state minimum wage is set at $8 per hour. Only seven other states have a rate at $8 or higher; the federal minimum wage is $7.25.
The increase will take place in stages, with a hike to $9 by July 1, 2014, and $10 by January 1, 2016.
Both the state Senate and Assembly passed the bill and sent it to Governor Jerry Brown, who is expected to sign it into law. “The minimum wage has not kept pace with rising costs,” Governor Brown said in a statement. “This legislation is overdue and will help families struggling in this harsh economy.”
The legislation faced significant resistance. Opponents argued that employers would be unable to afford the higher wage and that the increase would slow down economic recovery in the state, possibly leading to layoffs.
But backers managed to garner enough support to pass the bill, which will make California the state with the highest minimum wage in the country (Washington currently holds the title with workers earning $9.19 per hour).
California’s passage of the bill may be indicative of a national trend, as three other states increased their minimum wage this year.
The current rate of $7.25 in New York will go up to $8 by the end of 2013, increase to $8.75 by the end of 2014, and reach $9 by the end of 2015. Connecticut employers will also pay $9 per hour beginning January 1, 2015, increasing from the current $8.25 to $8.70 by January 1, 2014. And Rhode Island workers will earn $8 per hour beginning January 1, 2014, up from $7.75.
Why it matters: While employers in California, Connecticut, New York, and Rhode Island prepare to pay their employees more, employers in other states should pay close attention. Jurisdictions such as Alaska, Hawaii, Idaho, Illinois, Maryland, Massachusetts, Minnesota, New Jersey, South Dakota, and Washington, D.C., are all considering increases to the state minimum wage, either through legislation or ballot measures.